Beware of Warranty Deeds That Can Marry You for Life

Unmarried heterosexual couples and gay couples often buy property together. In routine transactions, the only people who study the closing documents are the title company and the Realtors. Unfortunately, a major problem can develop if property is conveyed to the couple as "joint tenants with full rights of survivorship."

"Joint tenants with full rights of survivorship" means that when one of the owners dies, the other owner inherits the entire interest in the property. This passes outside of any probate court, so this result overrides any provision in a will or trust to the contrary.

"Tenants in common," on the other hand, are owners who hold their interest in the property as if it were a separate asset. This "undivided one half" interest can be sold, mortgaged, or bequeathed in a will. When either of the owners dies, that owner’s estate inherits the interest in the property. This may result in the other owner’s now being forced to deal with a stranger -- or even an enemy in some strained families.

When couples are engaged in a harmonious relationship, they may think that they in fact want to be joint tenants with full rights of survivorship. The problem, however, is that in Michigan, the courts have held that they do not have the jurisdiction to partition this relationship or end it. If one were married and this were the "marital home," then the judge would have jurisdiction under the divorce laws to distribute the property to one of the parties or order it sold. In the absence of a marriage, however, this sort of jurisdiction does not exist. What happens then is that if the couple has a falling out and separates, neither of them will be able to force a sale of the property. Meanwhile, the parties remain liable on a mortgage they now may regret.

The solution is to hold the property as "tenants in common." You have to look at your deed to find out what you are now if you are in this situation. The deed will have the words "joint tenants with full rights of survivorship" after your name if that is what you are. If the deed just has your names on it without any further designation, then you already are tenants in common under the law because that is the presumption for unmarried people. (It is actually reversed for married couples because the law assumes that they want to be joint tenants with full rights of survivorship.)

If you are a joint tenant with full rights of survivorship, this form of ownership can be changed by having both you and your partner execute a quit claim deed conveying the property to yourselves as tenants in common. You can then execute a will that leaves the individual interests in the property to each other in the case of death. If there is a falling out, either party can revoke his/her will. This is easy to do.

Strangely enough, married couples can be sure that a divorce court will divide and/or distribute any marital property as part of the proceedings. Unmarried couples seldom suspect that if they break up, no court will be able to assist them under current law. In this respect, the wrong kind of deed can literally marry you for life!

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